ACA News & Publications

ACA Pathways: ACA Repeal Starts Now... What You Need To Know

March 09, 2017

Earlier this week, Republican leadership in the U.S. House of Representatives issued two bills to repeal and replace the Affordable Care Act (ACA) through the budget reconciliation process. These bills, which were issued by the Ways and Means Committee and the Energy and Commerce Committee, are collectively known as the American Health Care Act.

To become law, both bills must go through the legislative process, although a budget reconciliation bill can be passed with a simple majority vote. Debate on the legislation began on March 8, 2017, and as of today, after many hours of debate, both bills have cleared their respective committees, paving the way for a full House vote in the near future. If passed in the House, it will go to the Senate, where its passage in its current state is uncertain at this time. However, if passed by both the House and the Senate, the law would then go to President Trump for approval. It is important to note that a full repeal of the ACA cannot be accomplished through this process.

Summary of American Health Care Act's Provisions

If enacted, the new law would not repeal the ACA entirely, although it would make significant changes to key provisions. These changes include the following:

The ACA's employer and individual mandates would be repealed retroactively beginning in 2016. Relief is also provided from many other of ACA's tax provisions, including the following:

The effective date for imposing a 40 percent excise tax, known as the Cadillac tax, on high cost coverage would be delayed from 2020 to 2025.

The restrictions on using Health Savings Accounts (HSAs) and Health care flexible spending accounts (FSAs) for over the counter medications would be repealed beginning in 2018, as would be the additional Medicare tax on high-income individuals.

Health FSA contribution limits would be repealed effective for taxable years beginning January 1, 2018.

The annual health insurance providers fee also gets repealed going forward (currently there is a moratorium in effect on paying the fee for 2017).

Marketplace subsidies would be replaced with tax credits that could be both advanced to the individual for payment of current premiums, as well as refundable with the filing of his or her tax return. The tax credits would also be age-based (versus income based). Thus, older individuals would be eligible to receive a larger credit.

The Medicaid program would be fundamentally re-vamped. ACA's Medicaid expansion would be repealed by 2020, at which time the program would transition to being financed by a per capita allotment, similar to a block grant.

HSAs would be enhanced, including providing for an increase in the maximum HSA contribution limit, beginning in 2018, up to the maximum out-of-pocket limits allowed by law, as well allowing both spouses of a married couple to make catch-up contributions to the same HSA.

Key ACA provisions remaining under the draft bill include the following:

Nondiscrimination rules (on the basis of race, nationality, disability, age or sex).

Prohibition on health status underwriting.

What's Next?

While there is strong pushback from various health related organizations, such as the American Medical Association (AMA), and uncertainty about the bill's viability in the Senate, the President is actively involved in pushing this bill forward.

The bills will now be combined by the House Budget Committee, and sent to the House Rules Committee. It will then be sent to the full House of Representatives for a vote. If passed, it will be sent to the Senate for consideration and a vote. If passed with amendments, it will be sent back to the House of Representatives for a conference. A final version of the bill will be then sent to the President for his signature.

Establishes program (Patient and State Stability Fund) from 2018-2026 for state use for a variety of initiatives, including high risk pools, reinsurance programs, subsidize providers or programs to promote access to preventive care services

Appropriates $15 billion per year for 2018 and 2019; $10 billion annual from 2020-2026 for a total of $100 billion, to be allocated among states

This ACA Pathways is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. The information contained in this ACA Pathways includes emerging health care news from a limited perspective and does not encompass all views. The information was selected from a wide range of sources selected on the basis of their potential impact on employers and/or their employee benefit plans. For more information, please contact Burnham Benefits.

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